MISC 16-000643

November 6, 2017

Middlesex, ss.

VHAY, J.

DECISION

Plaintiff Deutsche Bank National Trust Company, as trustee of the Carrington Mortgage Loan Trust, Series 2005-NC5, Asset Backed Pass-Through Certificates (the "Trustee"), filed suit in this Court under G.L. c. 240, §§ 6-10 and c. 185, § 1(k) to obtain several broad declarations: an order "validating" a 2011 foreclosure sale of a multi-family residence at 616-618 Stevens Street in Lowell, Massachusetts; an order "validating" the deed that resulted from that sale; a declaration "removing any clouds" on the Trustee's title to 616-618 Stevens Street; and a declaration that the Trustee is the "true and lawful owner" of 616-618 Stevens Street, subject to any encumbrances of record. What this action really boils down to, in the world following U.S. Bank N.A. v. Ibanez, 458 Mass. 637 (2011), is whether, at the time the Trustee foreclosed on 616-618 Stevens Street, the Trustee had received by assignment the mortgage upon which the Trustee relied in conducting the foreclosure. The Trustee claims it had received such an assignment; the current occupant of 616-618 Stevens Street, Virak Pichchintra Kimkhnal, disagrees, and thus claims that the foreclosure sale was invalid.

The undisputed facts are before the Court on the Trustee's motion for summary judgment. On April 29, 2005, The New York Mortgage Company, LLC loaned Ms. Kimkhnal $351,000. She gave the Company a note in that amount (the "Note"). She also granted the Company a mortgage in 616-618 Stevens Street (the "Mortgage") to secure her obligation to pay the Note.

Someone dutifully recorded the Mortgage in the Middlesex County (Northern District) Registry of Deeds the same day Ms. Kimkhnal was signed it. But there was yet another document signed on April 29, 2005 that didn't get recorded, probably because it contains several noticeable gaps that no one's ever filled in. That document is entitled "Corporate Assignment of Security Instrument," which this Decision will call "Assignment No. 1." New York Mortgage signed Assignment No. 1 in favor of New Century Mortgage Corporation. (New York Mortgage also signed an endorsement to New Century on Ms. Kimkhnal's Note, but unlike Assignment No. 1, the endorsement is undated.) Assignment No. 1 does not set forth, in so many words, what the parties to it actually assigned. In fact, it does not expressly state that it is assigning the Mortgage (or any particular mortgage, for that matter). The unfilled blanks in Assignment No. 1 include the recording information for the security instrument that New York Mortgage intended to assign.

While Assignment No. 1 has a variety of gaps, it isn't totally blank, and where the parties on a motion for summary judgment don't dispute either what Assignment No. 1 contains or related contextual facts, this Court has the obligation to sort out what those facts reveal.
Assignment No. 1 describes, for example, the date of whatever the parties intended to assign (April 29, 2005), the person who signed the assigned instrument (Ms. Kimkhnal), her counterparty (The New York Mortgage Company), and the location of the premises affected by the assigned security instrument (616-618 Stevens Street, Lowell, Massachusetts). Two other pieces of information confirm that Assignment No. 1 pertains to a specific piece of real property, 616-618 Stevens Street: Exhibit A to Assignment No. 1 contains a metes-and-bounds description of 616-618 Stevens Street, and on the face of Assignment No. 1, one sees "Book 9470, Page 22." If one checks the registry of deeds for properties in Lowell, Massachusetts and pulls what's recorded in Book 9470, Page 22, one finds a 1988 deed for 616-618 Stevens that contains the same metes-and-bounds description found in Assignment No. 1's Exhibit A. Finally, two other pieces of information inform the reader of Assignment No. 1 that the assigned security instrument is a mortgage: first, a "mortgage" is what one would otherwise call a "security instrument" affecting real property; and second, preprinted language on the document reads: "This assignment is not subject to the requirements of Section 275 of the New York Real Property Law because it is an assignment within the secondary mortgage market."

There's one last undisputed fact that sheds light on Assignment No. 1: New Century, the assignee in Assignment No. 1, thought that Assignment No. 1 assigned the Mortgage. In March 2011, New Century signed a document, which this Decision will call "Assignment No. 2," in which New Century assigned to the Trustee whatever interest New Century had in the Mortgage. Unlike Assignment No. 1, someone recorded Assignment No. 2 at the registry of deeds. Unlike Assignment No. 1, Assignment No. 2 is clear that it is assigning the Mortgage: Assignment No. 2 includes the Mortgage's recording information, as well as with the name of the mortgagor, the name of the original mortgagee, and the Mortgage's date.

Later in 2011, Ms. Kimkhnal defaulted under the terms and conditions of the Mortgage. On June 7, 2011, the Trustee published the first of three notices that preceded a June 29, 2011 foreclosure sale of 616-618 Stevens Street. The Trustee was the successful bidder. The Trustee recorded a foreclosure deed for 616-618 Stevens Street at the Registry in Book 25427, Page 164.

Ibanez holds that if "a plaintiff files a complaint asking for a declaration of clear title after a mortgage foreclosure, a judge is entitled to ask for proof that the foreclosing entity was the mortgage holder at the time of the notice of sale and foreclosure. . . ." Ibanez, 458 Mass. at 650-51. Where the foreclosing entity claims rights pursuant to an assignment, the entity must prove the assignment "by a party that itself held the mortgage. A foreclosing entity may provide a complete chain of assignments linking it to the record holder of the mortgage, or a single assignment from the record holder of the mortgage." Id. at 651 (citations omitted).

The undisputed facts evince a chain of assignments from The New York Mortgage Company, LLC, to New Century Mortgage Corporation, and finally to the Trustee. Assignments No. 1 and No. 2 preceded the Trustee's first notice of the foreclosure sale for 616-618 Stevens Street, and thus the Trustee has proven what it needs to under Ibanez.

Ms. Kimkhnal attacks the Trustee's evidence of assignment in three respects. She first points out that Assignment No. 1 never was recorded  indeed, because Assignment No. 1 failed to identify the Mortgage by its book/page or instrument number, the document might be entirely unsuitable for recording under G.L. c. 183, § 6A as a stand-alone document. Ibanez rejects Ms. Kimkhnal's first argument: "We do not suggest that an assignment must be in recordable form at the time of the notice of sale or the subsequent foreclosure sale, although recording is likely to be the better practice." Ibanez, 458 Mass. at 651. Kimkhnal has offered no reasons
why Ibanez is incorrect in this respect, or why this Court should revisit Ibanez's holding concerning unrecorded assignments.

Second, Ms. Kimkhnal argues that the Trustee's undisputed evidence isn't enough to prove that Assignment No. 1 actually assigned the Mortgage. Kimkhnal is correct that Assignment No. 1 does not identify, specifically, the Mortgage as the object of the Assignment. Kimkhnal thus is correct that it is theoretically possible that New York Mortgage intended to assign to New Century some other mortgage. Invoking an adage that's familiar to even first-year law students  that, when considering a motion for summary judgment, the court must draw all favorable inferences in favor of the party opposing the motion  Kimkhnal argues that the Court may not rule in favor of the Trustee on summary judgment.

The adage doesn't carry the day for Ms. Kimkhnal. A court is obligated to draw inferences favorable to the party opposing a motion for summary judgment only

when they rest on clear averment[s] of subsidiary facts in the party's pleadings or affidavits. A party failing to file [opposing evidentiary materials] cannot rely on a hope that the judge might draw favorable contradictory inferences from the apparently uncontroverted facts. . . . [T]he court may indeed correctly reach legal conclusions raised by inference from undisputed facts. Thus if the parties agree (or at least do not controvert) the contents of a document, the court can rightly extract the parties' intent from the document's language, as a matter of law, and render summary judgment accordingly.

James W. Smith and Hiller B. Zobel, Rules Practice, 7 Mass. Prac. Series § 56.8, 292-93 (2d ed. 2007) (footnotes omitted, emphasis in original). Ms. Kimkhnal has not disputed any of the Trustee's facts, which bear on both the content of Assignment No. 1 and its context. Those undisputed facts point only in one direction: that Assignment No. 1 memorializes the assignment of the Mortgage in April 2005 to New Century. Ms. Kimkhnal has offered no evidence that Assignment No. 1 intended to assign some other mortgage to New Century, or that New York Mortgage wished to retain the Mortgage (and not assign it to New Century).

Finally, Ms. Kimkhnal argues that the Trustee hasn't proved an assignment to the Trustee of the Note, and if that's the case, the Trustee can't claim any rights under the Mortgage. Ms. Kimkhnal correctly points out that New York Mortgage's endorsement of the Note to New Century is undated. But Assignment No. 1 states whatever security instrument it assigns is being assigned "TOGETHER with the note or notes therein described or referred to. . . ." It's also undisputed that the Mortgage describes the Note. Assignment No. 1 thus supplies the date that's missing from the endorsed Note. Assignment No. 1 thus assigned both the Note and the Mortgage to New Century, and Assignment No. 2 assigned both the Note and the Mortgage to the Trustee.

The Court thus GRANTS the Trustee's motion for summary judgment. As Ms. Kimkhnal has not challenged in this proceeding anything relating to the Trustee's foreclosure sale other than whether the Trustee was an assignee of the Mortgage at the time of the sale, the Court will enter judgment in favor of the Trustee as requested in its Verified Complaint to Validate Foreclosure.